Focus Turns to Fed Rate Decision as USD Holds Steady
Markets are treading cautiously ahead of the U.S. Federal Reserve’s interest rate decision and projections later today. Energy prices saw slight gains, while metals were mostly flat. Currency movements are subdued. Traders are waiting for major data points. These could set the tone for the remainder of the year.
Key Data Out Today
- Eurozone CPI (Nov): Core YoY inflation held steady at 2.7%, in line with expectations. MoM figures remain subdued at -0.6%.
- U.S. Building Permits and Housing Starts (Nov): Building permits forecasted at 1.43M and housing starts at 1.34M.
- SNB Quarterly Bulletin (Q4): Insights on Switzerland’s economic outlook and policy stance.U.S. Fed Interest Rate Decision: Expected at 4.5%, with focus on the Fed’s forward guidance and economic projections.
- NZ GDP Q3: Forecast at -0.4% QoQ, signaling economic challenges.
Energy & Precious Metals
- Crude Oil: WTI rose to $70.46 (+0.55%), while Brent gained to $73.54 (+0.48%), supported by improved short-term demand.
- Natural Gas: Up 0.60% to $3.32/MMBtu as colder forecasts boost demand expectations.
- Gold: Steady at $2648.05/oz (+0.03%), as investors await the Fed’s rate outlook.
- Silver: Edged down to $30.43/oz (-0.24%), reflecting weaker industrial sentiment.
Currency Movements
EUR/USD
- EUR/USD: Flat at 1.0491 (+0.01%), with traders digesting Eurozone CPI data showing limited inflationary pressures.
GBP/USD
- GBP/USD: Down 0.10% to 1.2696, as concerns persist over UK economic momentum despite recent wage data.
AUD/USD
- AUD/USD: Dropped 0.43% to 0.6310, driven by risk-off sentiment and weak commodity performance.
NZD/USD
- NZD/USD: Fell 0.60% to 0.5726, pressured by expectations of a weak Q3 GDP print later today.
USD/JPY
- USD/JPY: Slightly higher at 153.61 (+0.12%), supported by U.S. dollar strength and yield differentials.
USD/CNY
- USD/CNY: Up 0.06% to 7.2922, reflecting ongoing pressures on the yuan amid mixed Chinese economic indicators.
USD/CHF
- USD/CHF: Gained 0.11% to 0.8940, as demand for the dollar remains strong ahead of the Fed decision.
USD/CAD
- USD/CAD: Rose to 1.4330 (+0.14%), as lower oil gains weighed on the Canadian dollar.
USD/MXN
- USD/MXN: Slightly lower at 20.15 (-0.11%), as the peso remains resilient amid attractive interest rates in Mexico.
USD/INR
- USD/INR: Flat at 84.91 (+0.01%), holding steady as investors monitor Fed developments.
Things to Keep a Watch On:
- Fed Rate Decision and Projections: Markets are focused on interest rate guidance. They are also observing how the Fed views inflation as we head into 2024.
- Eurozone Inflation Data: CPI outcomes may shape the ECB’s stance going forward.
- Energy Markets: Watch for movements in natural gas and crude oil as winter demand plays out.
- New Zealand GDP: A weaker-than-expected print could weigh further on the NZD.